Editorial Northern benefits

Isolation, for example, means your spouse can’t get the same medical treatment as someone living in the south, that your children spend 3-4 hours on the road going to and from school each day. Gasoline at 80 cents a litre, chocolate bars at $2 and potatoes at $1 a pound are the kinds of factors that contribute to a higher cost of living. At the Nanisivik mine site on the northern tip of Baffin Island, environmental hardship means having to let someone know you plan to drive to the closest neighbouring community 30 km away because it can be fatal if anything goes wrong during the journey and no one knows your whereabouts.

It takes a certain breed to live in the north, even though employers have traditionally offered substantial benefits to offset those hardships. Free room and board, trips south for rest and relaxation and higher wage rates are all considered part of the package needed to attract skilled workers to the mines that opened large parts of the north. To many who choose to live in northern Canada, the way of life is the main attraction. Nevertheless, if the financial costs are not offset, it becomes more difficult to justify living in northern communities. Those financial incentives are a necessity to attract good employees.

But because many employees receive what the federal tax collectors consider to be taxable benefits, rules are enforced to ensure that northern workers such as those at Nanisivik are taxed for a portion of the benefits paid by the company.

On the other hand, it has clearly been Ottawa’s objective to encourage people to live and work in remote areas. To that end, the government came up with a system of tax benefits — a tax deduction of $5,400 a year per household — that went into effect three years ago.

Ottawa’s conflicting goals — to maximize revenue on the one hand, and to encourage northern living on the other — led to a mish-mash of rules and regulations that have become almost incomprehensible, even to the experts. Taxpayers were eligible for the deduction if the community in which they lived met the criteria, and that meant scoring a certain level of points with points awarded for such factors as type of vegetation, climatic conditions, distance from urban centres, population and other factors.

What has developed is a bureaucratic nightmare where taxpayers in one community qualify for the deduction while those in another community nearby do not for the sake of a few points on an arbitrary scale.

As a result of that, there is consistent pressure on the government to include more communities in the scheme. The government thus faced the dilemma of either not extending the benefits to communities that would otherwise qualify or to provide the benefits to more people but reduce the amount available. Neither alternative is attractive.

A task force set up by Finance Mininster Michael Wilson in April, 1988, has recommended that the problem be solved by simply drawing a line across the map of Canada. Those north of the line qualify for the benefits, those south of the line don’t.

“We believe it is important to remember that the original intent of the program was to attract people to places in the north where jobs are available, rather than to provide financial compensation to residents of remote areas,” said the task force members in their report.

“We are convinced that our recommendations are viable if the Northern Residents Deductions are to continue to be provided through the tax system. We believe that our proposal is fair and equitable and will provide a permanent solution to the problem of determining eligibility for the deductions.”

There’s no doubt that such incentives have to be provided if Ottawa sincerely wishes to create long-term employment in the north. While the task force’s recommendations will result in some adjustments and some difficult demarcations, its simplicity makes it a much more attractive alternative than the existing system.

Pending a closer examination by those who have to live by any changes that are made to the system and modifications that they might suggest, we think the government should implement these recommendations as quickly as possible.

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